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I.channel and distribution tactics 9
1. Channel and Distribution Tactics
⢠Bucklinâs definition of distribution
⢠Todayâs system of exchange
⢠Channel intermediaries
⢠Six basic channel decisions
⢠Selection consideration
⢠Potential Influence Strategies - Frazier and Sheth
(1989)
⢠Frequencies of use of influence strategies - Frazier
and Summers (1984)
2. A channel of distribution
comprises a set of institutions
which perform all of the
activities utilised to move a
product and its title from
production to consumption
Bucklin - Theory of Distribution Channel Structure (1966)
3. Todayâs system of exchange
Promotion
Contact
Negotiation
Transporting and storing
Producers
Users
Financing
Packaging
Money
Goods
4. Channel intermediaries -
Wholesalers
⢠Break down âbulkâ
⢠buys from producers and sell small quantities to
retailers
⢠Provides storage facilities
⢠reduces contact cost between producer and
consumer
⢠Wholesaler takes some of the marketing
responsibility e.g sales force, promotions
5. Channel intermediaries - Agents
⢠Mainly used in international markets
⢠Commission agent - does not take title of
the goods. Secures orders.
⢠Stockist agent - hold âconsignmentâ stock
⢠Control is difficult due to cultural
differences
⢠Training, motivation, etc are expensive
6. Channel intermediaries - Retailer
⢠Much stronger personal relationship with
the consumer
⢠Hold a variety of products
⢠Offer consumers credit
⢠Promote and merchandise products
⢠Price the final product
⢠Build retailer âbrandâ in the high street
7. Channel intermediaries - Internet
⢠Sell to a geographically disperse market
⢠Able to target and focus on specific segments
⢠Relatively low set-up costs
⢠Use of e-commerce technology (for payment,
shopping software, etc)
⢠Paradigm shift in commerce and consumption
8. Six basic channel decisions
⢠Direct or indirect channels
⢠Single or multiple channels
⢠Length of channel
⢠Types of intermediaries
⢠Number of intermediaries at each level
⢠Which intermediaries? Avoid intrachannel
conflict
9. Selection consideration
⢠Market segment - must know the specific segment
and target customer
⢠Changes during plc - different channels are
exploited at various stages of plc
⢠Producer-distributor fit - their policies, strategies
and image
⢠Qualification assessment - experience and track
record must be established
⢠Distributor training and support
10. Potential Influence Strategies-
Frazier and Sheth (1989)
⢠Indirect influence strategies - information is
merely exchanged with channel member
personnel
⢠Direct unmediated strategies - consequences
of a poor response from the market are
stressed
⢠Reward and punishment strategies - given
to channel members and their firms
11. ⢠Direct unweighted strategy or request -
producerâs wishes are communicated . No
consequences are applied or mentioned
⢠Direct mediated strategies - specific action
is requested and consequences of rejection
are stressed
â e.g.1 control of retail pricing
â e.g.2 minimum order size
â e.g.3 salesperson training
â e.g.4 physical layout of store
â e.g. 5 territorial and customer restrictions
12. Frequencies of use of Influence Strategies
Mean Most Tied for Never
use frequently most used
used frequently
used
Information 49% 62% 6% 8%
exchange
Requests 27 13 7 11
Recommend 19 8 7 23
ations
Promises 15 4 9 37
Threats 10 1 5 53
Legalistic 6 0 3 59
pleas
Frazier and Summers (1984)